SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Year Ended December 31, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____ to ____
Commission file number: Whitman Corporation 001-15019
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
WHITMAN CORPORATION
3501 Algonquin Road
Rolling Meadows, Illinois 60008
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this Annual Report to be signed on its
behalf by the undersigned hereunto duly authorized.
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
By: /s/ PETER M. PEREZ
-------------------------------------
Peter M. Perez
Senior Vice President - Human Resources
Dated: June 29, 1999
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
Report of Independent Public Accountants
Financial Statements:
Statements of Net Assets Available for Benefits, with Fund Information,
as of December 31, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits, with Fund
Information, for the years ended December 31, 1998 and 1997
Notes to Financial Statements
Exhibits:
Exhibit A -- Consent of Independent Public Accountants
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
Whitman Corporation Master Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of WHITMAN CORPORATION MASTER RETIREMENT SAVINGS PLAN as of December 31, 1998
and 1997, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statements of
net assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits and changes in net
assets available for plan benefits of each fund. The fund information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 23, 1999
<PAGE>
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
As of December 31, 1998
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined
Contribution Master Trust $54,792,297 $ 1,682,246 $ 5,747,093 $10,381,915 $15,935,898 $ 9,113,881 $ 5,451,489
Contributions Receivable:
Participant 16,643 475 1,899 3,121 5,119 2,689 1,473
Employer, net of forfeitures 12,842 449 1,507 2,396 3,600 2,523 990
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets 54,821,782 1,683,170 5,750,499 10,387,432 15,944,617 9,119,093 5,453,952
----------- ----------- ----------- ----------- ----------- ----------- -----------
Liabilities:
Expenses Payable 43,267 1,385 4,559 8,108 12,509 7,519 4,312
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities 43,267 1,385 4,559 8,108 12,509 7,519 4,312
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets Available for Benefits $54,778,515 $ 1,681,785 $ 5,745,940 $10,379,324 $15,932,108 $ 9,111,574 $ 5,449,640
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined
Contribution Master Trust $ 1,157,760 $ 621,304 $ 2,628,209 $ 2,015,128 $ 57,374
Contributions Receivable:
Participant 418 332 1,117 - -
Employer, net of forfeitures 286 219 872 - -
----------- ----------- ----------- ----------- -----------
Total Assets $ 1,158,464 $ 621,855 $ 2,630,198 $ 2,015,128 $ 57,374
----------- ----------- ----------- ----------- -----------
Liabilities:
Expenses Payable 919 491 1,969 1,496 -
----------- ----------- ----------- ----------- -----------
Total Liabilities 919 491 1,969 1,496 -
----------- ----------- ----------- ----------- -----------
Net Assets Available for Benefits $ 1,157,545 $ 621,364 $ 2,628,229 $ 2,013,632 $ 57,374
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
As of December 31, 1997
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined
Contribution Master Trust $51,757,275 $ 1,342,930 $ 5,740,648 $ 9,908,515 $14,346,076 $ 9,460,189 $ 4,871,034
Contributions Receivable:
Participant 69,855 2,124 8,420 14,033 22,907 10,756 5,694
Employer, net of forfeitures 22,696 843 2,808 4,488 6,988 4,495 1,311
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets 51,849,826 1,345,897 5,751,876 9,927,036 14,375,971 9,475,440 4,878,039
----------- ----------- ----------- ----------- ----------- ----------- -----------
Liabilities:
Expenses Payable 19,347 508 2,141 3,711 5,383 3,547 1,819
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities 19,347 508 2,141 3,711 5,383 3,547 1,819
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets Available for Benefits $51,830,479 $ 1,345,389 $ 5,749,735 $ 9,923,325 $14,370,588 $ 9,471,893 $ 4,876,220
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Plan interest in Whitman
Corporation Defined
Contribution Master Trust $ 1,264,844 $ 813,814 $ 1,818,847 $ 2,171,767 $ 18,611
Contributions Receivable:
Participant 1,884 1,554 2,483 - -
Employer, net of forfeitures 558 417 788 - -
----------- ----------- ----------- ----------- -----------
Total Assets 1,267,286 815,785 1,822,118 2,171,767 18,611
Liabilities:
Expenses Payable 468 306 679 785 -
----------- ----------- ----------- ----------- -----------
Total Liabilities 468 306 679 785 -
----------- ----------- ----------- ----------- -----------
Net Assets Available for Benefits $ 1,266,818 $ 815,479 $ 1,821,439 $ 2,170,982 $ 18,611
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1998
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 8,237,906 $ 180,657 $ 870,635 $ 1,743,993 $ 2,793,546 $ 498,772 $ 1,018,619
Contributions:
Participant 4,209,371 344,953 442,558 738,281 1,417,058 553,759 357,869
Employer, net of forfeitures 1,233,751 41,102 141,001 230,522 394,578 223,461 101,561
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions 13,681,028 566,712 1,454,194 2,712,796 4,605,182 1,275,992 1,478,049
----------- ----------- ----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Participants' withdrawals 2,112,548 144,513 327,933 320,600 498,046 553,433 184,655
Administrative expenses 148,218 4,829 16,223 28,666 45,264 27,041 15,565
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deductions 2,260,766 149,342 344,156 349,266 543,310 580,474 200,220
----------- ----------- ----------- ----------- ----------- ----------- -----------
Transfer to other plans (Note 6) (8,472,226) (290,826) (814,738) (1,411,429) (2,559,578) (1,010,298) (909,317)
Interfund transfers - 209,852 (299,095) (496,102) 59,226 (45,539) 204,908
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 2,948,036 336,396 (3,795) 455,999 1,561,520 (360,319) 573,420
Net Assets Available for Benefits:
At December 31, 1997 51,830,479 1,345,389 5,749,735 9,923,325 14,370,588 9,471,893 4,876,220
----------- ----------- ----------- ----------- ----------- ----------- -----------
At December 31, 1998 $54,778,515 $ 1,681,785 $ 5,745,940 $10,379,324 $15,932,108 $ 9,111,574 $ 5,449,640
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 86,108 $ 119,590 $ 791,346 $ 130,517 $ 4,123
Contributions:
Participant 111,395 76,374 167,124 - -
Employer, net of forfeitures 30,847 20,561 50,118 - -
----------- ----------- ----------- ----------- -----------
Total additions 228,350 216,525 1,008,588 130,517 4,123
----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Participants' withdrawals 39,204 43,789 60,486 (33,049) (27,062)
Administrative expenses 2,962 1,631 7,343 5,279 (6,585)
----------- ----------- ----------- ----------- -----------
Total deductions 42,166 45,420 67,829 (27,770) (33,647)
----------- ----------- ----------- ----------- -----------
Transfer to other plans (Note 6) (260,943) (167,998) (670,693) (376,406) -
Interfund transfers (34,514) (197,222) 536,724 60,769 993
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (109,273) (194,115) 806,790 (157,350) 38,763
Net Assets Available for Benefits:
At December 31, 1997 1,266,818 815,479 1,821,439 2,170,982 18,611
----------- ----------- ----------- ----------- -----------
At December 31, 1998 $ 1,157,545 $ 621,364 $ 2,628,229 $ 2,013,632 $ 57,374
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
WHITMAN CORPORATION
MASTER RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
For the Year Ended December 31, 1997
Participant Directed
Investment Funds
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Aggressive Fixed Large
Conservative Moderate Growth Growth Income Company
Total Portfolio Portfolio Portfolio Portfolio Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust $ 7,739,127 $ 176,250 $ 904,642 $ 1,732,605 $ 2,694,011 $ 589,927 $ 1,045,844
Contributions:
Participant 5,572,377 186,905 635,191 1,095,673 1,850,896 773,099 464,613
Employer, net of forfeitures 2,013,014 76,053 222,377 401,367 635,771 322,094 168,001
Transfer from prior plans 2,892,720 - - - - 2,892,720 -
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Additions 18,217,238 439,208 1,762,210 3,229,645 5,180,678 4,577,840 1,678,458
----------- ----------- ----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Participants' Withdrawals 2,428,369 81,488 231,764 368,660 614,478 769,622 195,895
Administrative Expenses 135,851 2,082 9,305 15,803 22,311 31,134 7,962
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Deductions 2,564,220 83,570 241,069 384,463 636,789 800,756 203,857
----------- ----------- ----------- ----------- ----------- ----------- -----------
Interfund Transfers - 48,725 192,427 409,571 688,748 (2,822,652) 740,681
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 15,653,018 404,363 1,713,568 3,254,753 5,232,637 954,432 2,215,282
Net Assets Available for Benefits
At December 31, 1996 36,177,461 941,026 4,036,167 6,668,572 9,137,951 8,517,461 2,660,938
----------- ----------- ----------- ----------- ----------- ----------- -----------
At December 31, 1997 $51,830,479 $ 1,345,389 $ 5,749,735 $ 9,923,325 $14,370,588 $ 9,471,893 $ 4,876,220
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Small Whitman Participant
Company International Stock Notes
Fund Fund Fund Receivable Other
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net Investment Income from
the Whitman Corporation Defined
Contribution Master Trust 227,494 12,597 205,287 146,379 4,091
Contributions:
Participant 148,695 135,257 292,728 - (10,680)
Employer, net of forfeitures 54,860 40,331 92,160 - -
Transfer from prior plans - - - - -
----------- ----------- ----------- ----------- -----------
Total Additions 431,049 188,185 590,175 146,379 (6,589)
----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Participants' Withdrawals 112,136 44,479 86,489 (66,539) (10,103)
Administrative Expenses 1,835 1,581 2,543 785 40,510
----------- ----------- ----------- ----------- -----------
Total Deductions 113,971 46,060 89,032 (65,754) 30,407
----------- ----------- ----------- ----------- -----------
Interfund Transfers 259,539 (27,153) 73,922 442,008 (5,816)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 576,617 114,972 575,065 654,141 (42,812)
Net Assets Available for Benefits
At December 31, 1996 690,201 700,507 1,246,374 1,516,841 61,423
----------- ----------- ----------- ----------- -----------
At December 31, 1997 1,266,818 815,479 1,821,439 2,170,982 18,611
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
WHITMAN CORPORATION
MASTER RETIREMENT
SAVINGS PLAN
----------
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) Description of Plan
The following brief description of the Whitman Corporation Master Retirement
Savings Plan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan which covers eligible employees of
Whitman Corporation and those of its subsidiary companies which adopt the Plan,
with any company having adopted the Plan along with Whitman Corporation being
considered an Employer. Any hourly employee who is a member of a group of
employees to whom the Plan has been made available through collective
bargaining, or through other unilateral employment requirements, and has elected
to participate in the Plan is considered a Participant. During 1998, one
operating company, Pepsi-Cola General Bottlers, Inc. participated in the plan.
During 1997, three operating companies participated in this Plan - Hussmann
International, Inc. (Hussmann), Midas, Inc. (Midas) and Pepsi-Cola General
Bottlers, Inc. (Pepsi) (See Note 6). The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
The Plan permits participating Employers to select from a variety of features to
offer a custom- tailored Plan to employee groups. The Employer may offer the
Plan in the form of a Pre-tax 401(k) Savings Plan or an After-tax Savings Plan.
A variety of employee/employer contribution arrangements are available and are
in effect for various employee groups.
The total annual pre-tax contributions by a Participant were limited in 1998 and
1997 to the lesser of $10,000 and $9,500, respectively (as adjusted to reflect
changes in the cost of living pursuant to Section 402(g) of the Internal Revenue
Code) or the appropriate percentage of the Participant's total compensation
during the year.
Forfeitures
Forfeited Employer contributions resulting from terminations of employment are
used to reduce Employer contributions after a Participant has terminated or
withdrawn from the Plan. In the event a Participant is rehired and reimburses
the amount disbursed to him from the Plan within the time period specified in
the Plan, the Employer is required to restore to the Participant's account any
previously forfeited amount used to reduce Employer contributions.
Plan Termination
Although it has not expressed any intent to do so, Whitman Corporation has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
Participant Accounts
Each Participant's account is credited with the Participant's contribution,
Employer contributions, and an allocation of Plan earnings. Allocations of
earnings are based on Participant account balances. The benefit to which a
Participant is entitled is the benefit that can be provided from the
Participant's account.
Participant Notes Receivable
In accordance with Plan provisions, loans are made to participants in amounts
not to exceed the lesser of one-half of the participant's vested account balance
or $50,000. The loans bear interest at the trustee's current prime rate in
effect on Monday of the week the loan is requested and are payable through
participant payroll withholdings under a reasonable repayment schedule of not
more than five years.
Vesting
Participants will be 100% vested in Employer contributions made after completion
of 5 years of vesting service, if permanently disabled, upon attainment of age
65, upon death, or if terminated by an Employer for specific reasons.
Participants are immediately vested in their voluntary contributions and actual
earnings thereon.
Payment of Benefits
On termination of service, a Participant may elect to receive the value of his
or her account in either a lump sum payment, in annual installments over a
period of time up to a maximum of fifteen years, in the form of immediate or
deferred annuity, or disbursement amounts at their discretion.
Expenses
External administrative expenses for the preparation and maintenance of the
Plan's financial records and participant statements, and service fees on
insurance contracts are paid from Plan assets. Trustee, legal, and all other
external expenses are also paid from Plan assets to the extent that those
expenses of the Plan are not paid by the Plan Sponsor.
Investment Options
Participants in the Plan have the right to direct that their contributions be
invested in one or more funds designated by the Plan's Administrative Committee
as available for investment purposes. As of December 31, 1998 and 1997, the
following investments were offered:
o Conservative Portfolio
o Moderate Portfolio
o Growth Portfolio
o Aggressive Growth Portfolio
o Fixed Income Fund
o Large Company Fund
o Small Company Fund
o International Fund
o Whitman Stock Fund
Employer matching contributions may be directed into the same funds, using the
same percentages, as Participant contributions. Earnings on investments in each
of the investment funds are reinvested in the respective funds.
(2) Interest in Whitman Corporation Defined Contribution Master Trust
Certain assets of the Plan are in the Whitman Corporation Defined Contribution
Master Trust (the Trust) which was established for the investment of assets of
the Plan and another Whitman Corporation sponsored retirement plan. Each plan
has an undivided interest in the Trust. The assets of the Trust are held by the
Northern Trust Company (the Trustee). The Plan's interest in the net assets of
the Trust is based on the individual plan participants' investment balances.
Investment income is allocated on a daily basis through a valuation performed by
the Trustee. Administrative expenses relating to the Trust are allocated to the
individual funds based upon average monthly balances invested by each plan. At
December 31, 1998 and 1997, the Plan's interest in the net assets of the Trust
was approximately 24% and 15%, respectively.
The Trust held the following classifications of investments as of December 31,
1998 and 1997:
1998 1997
----------------- -----------------
Investments at market value:
Common Stock $ 34,759,490 $ 40,068,461
Collective Investment Trusts 151,066,205 233,152,798
Participant Notes Receivable 4,779,889 7,932,041
Investments at contract value:
Investment contracts 39,735,483 67,731,979
----------------- -----------------
Total Trust Investments $ 230,341,067 $ 348,885,279
================= =================
As of December 31, 1998 and 1997, the net assets of the Trust include the above
investments and other miscellaneous net assets totaling $196,184 and $249,329,
respectively.
Investment Income for the Trust is as follows for the years ended December 31,
1998 and 1997:
1998 1997
----------------- -----------------
Net appreciation in fair value of
investments:
Common Stock $ 12,340,410 $ 4,124,603
Collective Investment Trusts 25,069,057 42,698,298
----------------- -----------------
37,409,467 46,822,901
Interest and Dividends 3,394,724 6,275,399
----------------- -----------------
Total Investment Income $ 40,804,191 $ 53,098,300
================= =================
(3) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are prepared on the accrual basis of
accounting.
Investment Valuation and Income Recognition
Except for the investment contracts, the Trust's investments are stated at fair
value. The fair values of marketable securities are based on quotations obtained
from national securities exchanges. Where marketable securities are not listed
on an exchange, quotations are obtained from brokerage firms.
Fully benefit-responsive investment contracts are valued at contract value,
which represents the principal balance of the investment contracts, plus accrued
interest at the stated contract rate, less payments received and contract
charges by the insurance company. The aggregate average yield of the investment
contracts for the year ended December 31, 1998 and 1997, was 6.2% and 6.5%,
respectively. The aggregate interest rate for the investment contracts as of
December 31, 1998 and 1997, was 6.6% and 6.7%, respectively. The fair value of
the investment contracts in the Trust as of December 31, 1998 and 1997, was
approximately $40,500,000 and $68,900,000, respectively.
The Trust records investment transactions on a trade date basis.
Benefits Paid to Participants
Benefits are recorded when paid.
Use of Estimates
The financial statements have been prepared in accordance with generally
accepted accounting principles and necessarily include amounts based on
estimates and assumptions by management. Actual results could differ from those
estimates.
(4) Transfer From Prior Plan
Effective January 1, 1997, the assets attributable to the hourly employees under
the Lou Gen, Ltd. Profit Sharing Plan were transferred to the Plan.
(5) Tax Status
The Internal Revenue Service has determined and informed the Company by a letter
dated January 8, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
administrator believes that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the IRC. Therefore, the Plan
administrator believes that the Plan was qualified and the related trust was
tax-exempt as of the financial statement dates.
(6) Transfer to Other Plans
On June 23, 1997, Whitman Corporation announced the planned spin-offs of two of
its operating subsidiaries, Midas, Inc. ("Midas") and Hussmann International,
Inc. ("Hussmann") to Whitman shareholders. Effective January 1, 1998, Midas
created the Midas Retirement Savings Plan for Salaried Employees, the Midas
Retirement Savings Plan for Hourly Employees, and the Midas Defined Contribution
Master Trust; and Hussmann created the Hussmann International, Inc. Retirement
Savings Plan for Salaried Employees, the Hussmann International, Inc. Retirement
Savings Plan for Hourly Employees, and the Hussmann International, Inc. Defined
Contribution Master Trust, to manage activity previously performed with the
Whitman Corporation Retirement Savings Plan, the Whitman Corporation Master
Retirement Savings Plan and the Whitman Corporation Defined Contribution Master
Trust.
In conjunction with the spin-offs, investment management for the S&P 500,
extended market, EAFE, and U.S. debt funds was transferred from Barclays Global
Investors to State Street Global Advisors. Effective January 1, 1998, $224.7
million of Whitman Corporation Defined Contribution Master Trust assets were
transferred from Barclays Global Investors to State Street Global Advisors.
Effective January 9, 1998, the fair market value of assets attributable to the
accounts of the participants who were employees of Midas and Hussmann was
transferred by the Whitman Corporation Defined Contribution Master Trust to the
Midas Defined Contribution Master Trust and Hussmann International, Inc. Defined
Contribution Master Trust, respectively, in accordance with the Distribution and
Indemnity Agreements executed by Whitman with Midas and Hussmann. The asset
transfer was $61.1 million to the Midas Defined Contribution Master Trust and
$97.9 million to the Hussmann International, Inc. Defined Contribution Master
Trust.
On January 30, 1998, Whitman completed the dividend distribution of Midas and
Hussmann common stock to Whitman shareholders of record on January 16, 1998. On
February 3, 1998, the Whitman Corporation Defined Contribution Master Trust
transferred the Midas and Hussmann shares received in the dividend distribution
to the Midas Defined Contribution Master Trust and Hussmann International, Inc.
Defined Contribution Master Trust, respectively, in exchange for Whitman
Corporation common shares. The market value of the asset exchange was $2.1
million with the Midas Defined Contribution Master Trust and $5.7 million with
the Hussmann International, Inc. Defined Contribution Master Trust.
(7) Subsequent Event
On January 25, 1999, Whitman Corporation announced that its Board of Directors
had approved a new business relationship with PepsiCo, Inc. ("PepsiCo"). As part
of the Contribution and Merger Agreement (the "Agreement") with PepsiCo and
Heartland Territories Holdings, Inc. ("New Whitman), PepsiCo contributed certain
assets of several domestic franchise territories in May 1999 to New Whitman and
Whitman Corporation merged into New Whitman. In addition, the Agreement provided
for Whitman Corporation's principal operating subsidiary, Pepsi-Cola General
Bottlers, Inc. ("Pepsi General") to sell to PepsiCo certain of its operations.
The sale of these operations occurred in March 1999. Pepsi General also acquired
certain international operations of PepsiCo in May 1999.
In July, 1999, the assets attributable to the accounts of the participants who
were employees of the domestic operations sold to PepsiCo are expected to be
transferred to the trust established under PepsiCo's retirement plans. The asset
transfer is expected to be approximately $5 million.
Effective June 11, 1999, the assets attributable to the participants under the
PepsiCo sponsored retirement plan were transferred to the Whitman Corporation
Defined Contribution Master Trust. The asset transfer amounted to approximately
$15 million.
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Exhibit A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, included in this Form 11-K, into Whitman Corporation's previously filed
Registration Statement File No. 033-53427.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
June 23, 1999
